What is Economics?
What are the three basic questions that help societies make choices about scarce resources?
The three basic questions are what, how, and for whom.
What are the four main economies?
Traditional, command, market, and mixed.
What are the three main forms of business organizations?
Sole proprietorship, partnership, and the corporation.
What is demand?
The desire, ability, and willingness to buy a product that can compete with others who have similar demands.
What is supply?
Supply is the amount of a product that would be offered for a sale at all possible prices that could prevail in the market.
What are the factors of production or resources required to produce the things we would like to have?
Land, capital, labor, and entrepreneurs.
What is a traditional economy?
An economy with the use of scarce resources and nearly all other economic activity stems from ritual, habit, or custom.
What is a corporation?
It is a form of business organization recognized by law as a separate legal entity with all the rights of an individual.
What states that the quantity demanded varies inversely with its price?
Law of Demand
What is the definition of Law of Supply?
The principle that suppliers will normally offer more for sale at high prices and less at lower prices.
What is gross domestic product (GDP)?
The dollar value of all final goods, services, and structures produced within a country’s border in a 12-month period.
What are the seven major economic and social goals?
They are freedom, efficiency, equity, security, full employment, price stability, and growth.
Is nonprofit organization a business? Why or why not?
A nonprofit is an organization because it works in a businesslike way to promote the collective interests of its members rather than to seek financial gain for its owners.
Elastic demand is when a given change in price causes a relatively larger change in quantity demanded. Inelastic demand means that a given change in price causes a relatively smaller change in the quantity demanded.
What are the three stages of production?
First stage: Increasing Marginal Returns
Second stage: Decreasing Marginal Returns
Third stage: Negative Marginal Returns
What is the key feature of the circular flow of economic activity?
It is a market, a location or other mechanism that allows buyers and sellers to change a specific product.
What is the modified free enterprise economy?
The economy where people and businesses carry on their economic affairs freely, but they are subject to some government intervention and regulation.
What are the two types of mergers and their definitions?
Horizontal merge is what takes a place when firms that produce the same kind of product join forces. Vertical merge is when companies involved in different stages of manufacturing or marketing join together.
What are the six different reasons change in demand happens?
The consumers income, taste, substitutes, complements, expectations, and number of consumers.
What is the difference between marginal and total cost?
Marginal cost is the extra cost incurred when producing one more unit of output and total cost is the production which is the sum of the fixed and variable costs.
What else does the study of economics do other than explaining how people deal with scarcity?
Economics also has the study of how things are made, bought, sold, and used. Insight as to how incomes are earned and spent, jobs are created, and how the economy works.
What does an entrepreneur manage and organize? And why?
The entrepreneur manages and organizes land, capital, and labor in order to seek the reward called profit.
What are the other three organizations other than nonprofit organizations that promote the interests of their members?
Labor, professional, and business organizations.
What are the three questions asked to the question of "What makes the demand for a specific good elastic or inelastic?"
Can the purchase be delayed? Are adequate substitutes available? Does the purchase use a large portion of income?
When a business knows about its costs, it can find the level of production that generates just enough revenue to cover its total operating costs. What is this called?
Break-even point